An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000

Question:

An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000 and pays 6% interest per year in two semiannual payments. Thus the purchaser of the bond will receive $30 every 6 months in addition to $1000 at the end of 20 years, along with the last $30 interest payment. If the investor wants to receive 8% interest, compounded semiannually, how much would he or she be willing to pay for the bond?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...